Volatility Shakes Market: Top And Flop ETFs Over A Month

After touching a peak in early August, the going became tough for the U.S. stock market thanks to volatility and heightened uncertainty. Notably, the major benchmarks, namely the S&P 500 and the Dow Jones shed 0.5% and 1.1%, respectively, in the past one month.

The long list of woes started with escalating tensions between the United States and North Korea from word of war. Now, fears of a trade war are looming large with Trump threatening to put a ban on the countries that do business with the rogue regime.

Then, Hurricane Harvey, first major hurricane in the United States in more than a decade, caused large-scale flooding along the U.S. Gulf coast, affecting transport of people and food. The storm seems to be one of the costliest natural disasters in the history of the country. The devastation did not stop there given that a new hurricane named Irma landed on the islands of the northeast Caribbean early last week and hit Florida in the weekend (read: ETFs to Watch in Harvey Aftermath & New Hurricane Irma).

Further, an uncertain Fed policy and fears over the implementation of President Donald Trump’s pro-growth agenda continue to weigh on the stocks. The Fed is on track to unwind its $4.5 trillion balance sheet but is extremely cautious of weak inflation that might put the third interest rates hike for this year off the table. Bouts of weak economic data especially on housing and consumer prices added to the woes.

However, strong corporate earnings, still low interest rates, and improving health of economies around the world are acting as tailwinds and will continue to drive the stock market this year. Additionally, the economy has been on a solid growth path buoyed by an impressive labor market, increase in wages and higher consumer spending.

Given this, several ETFs saw a spike in the month while some were laggards. Below, we have highlighted some of them:

Best ETFs

Sprott Junior Gold Miners ETF (NYSE:GDX) SGDJ

Acting as leveraged plays on gold price, gold mining ETFs are the largest beneficiaries of the trend as they tend to experience huge gains than their bullion cousins. That said, SGDJ stole the show over the past one month gaining 18%. This ETF targets the small-cap segment of the gold mining industry by tracking the Sprott Zacks Junior Gold Miners Index. The benchmark utilizes the factor-based methodology that seeks to emphasize companies with the strongest relative revenue growth and price momentum.

In total, the fund holds a small basket of 38 stocks with double-digit concentration on the top firm while others hold no more than 8.6% of assets. In terms of country exposure, Canada takes the largest share at 77% while the United States receives just 11% of SGDJ. The fund has accumulated $182.5 million in AUM and has an expense ratio of 0.57% (read: What Lies Ahead for Gold ETFs?).

Virtus LifeSci Biotech Clinical Trials ETF (HM:BBC)

Shift in investors’ sentiment to defensive sectors, which generally outperform during periods of low growth and high uncertainty, led to a surge in biotech ETFs. The wave of mergers and acquisitions added to the strength. BBC has a novel approach to biotechnology investing with exposure to companies in the clinical trials stage. This can easily be done by tracking the LifeSci Biotechnology Clinical Trials Index.

Holding 75 stocks in its basket, the fund is widely spread across various components with none holding more than 3.3% share. BBC is a small-cap centric fund, having amassed $28.2 million in its asset base. It charges 79 bps in fees per year from investors and trades in light average daily volume of around 12,000 shares. The fund has gained nearly 15.4% over the past one month and has a Zacks ETF Rank of #3 (Hold) with a High risk outlook (read: Biotech ETFs Soar on Gilead-Kite Deal).

iPath Pure Beta Nickel ETN NINI

Nickel ETFs gained from the dual tailwinds of lower production and weak dollar. In particular, NINI is designed to provide exposure to the Barclays (LON:BARC) Nickel Pure Beta TR Index, which reflects returns that are potentially available through an unleveraged investment in the futures contracts in the nickel markets. The index may roll into one of a number of futures contracts with varying expiration dates, as selected using the Barclays Pure Beta Series 2 Methodology. NINI has AUM of $1.5 million while trades in a paltry volume of more than 1,000 shares. It charges 75 bps in annual fees and has gained 15.5% over a month. The note has a Zacks ETF Rank of #3 with a High risk outlook (read: 3 Red Hot Base Metal ETFs).


Worst ETFs

iPath Bloomberg Coffee Subindex Total Return ETN JO

Coffee has seen declining prices owing to increased crop yields out of Brazil, the world’s largest producer of coffee beans. As such, JO lost 12.1% over the past one month. The product follows the Bloomberg Coffee Subindex Total Return, which delivers returns through an unleveraged investment in the futures contracts on coffee. The ETN has been able to manage $158.9 million in AUM and trades in solid volume of 232,000 shares per day. Expense ratio comes in at 0.75%. The note has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: Top and Flop ETFs of August: Metals Gain, Crops Crash).

PowerShares KBW Property & Casualty Insurance Portfolio KBWP

Insurers are the biggest losers from the Hurricane Harvey aftermath and Hurricane Irma. In particular, KBWP is the most directly hit ETF losing 8.4% in the same time period. The fund offers exposure to 24 property and casualty insurance companies by tracking the KBW Nasdaq Property & Casualty Index. It is moderately concentrated across components with each holding less than 8.9% of assets. The fund has $96.1 million in its asset base while trades in average daily volume of 13,000 shares. It charges 35 bps in annual fees and has shed 8.4% in one month. KBWP has a Zacks ETF Rank of #3 with a Medium risk outlook.

iShares U.S. Telecommunications ETF IYZ

Telecom sector has also been hit in the past one month. IYZ is one of the most popular ETFs in the broad telecom space with AUM of $411.5 million. The product tracks the Dow Jones U.S. Select Telecommunications Index, giving investors exposure to 20 stocks while charging 44 bps in fees and expenses. The ETF is highly concentrated on the top two firms at 10% share each while the others hold less than 6.9% of assets. It shed 6.4% share and has a Zacks ETF Rank of # 4 (Sell) with a Medium risk outlook (read: What Lies Ahead for Telecom ETFs?).



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SPROTT-JR GLD (NYSE:GLD) M (SGDJ): ETF Research Reports

IPATH-PB NICKEL (NINI): ETF Research Reports

BIOSH-BIO CLNCL (BBC): ETF Research Reports

ISHARS-US TELE (IYZ): ETF Research Reports

PWRSH-K P&C INS (KBWP): ETF Research Reports

IPATH-BB COFE (JO): ETF Research Reports

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